For anyone buying products or services online, secure transactions are of utmost importance. Although the risk of online credit card fraud is relatively low, considering the huge number of daily transactions, many consumers are still quite wary about using their credit card for an online payment. Fortunately, there are other payment options available, and one of these is the virtual credit card.

What is a Virtual Credit Card?

A virtual credit card is an online card only, issued by the credit card company. There is no plastic card issued. These virtual cards feature a single-time-use credit card number that’s created by the card provider, and frequently they have expiration dates if not used. They’re provided free of charge by the credit card issuer as a service to customers that wish to make an online payment with their cards but without risking the chance of online credit card fraud. This temporary credit card number is generated by software on the customer’s computer, and it gets linked with their main credit card number. This number is not traceable to their actual credit card or to their identity, which prevents hackers or untrustworthy merchants from accessing their data.

What are the Advantages of Using a Virtual Credit Card?

Virtual credit cards can typically be set up to only be valid for a specific length of time, and with a maximum credit limit per transaction on a given day. Any balance left over is credited back to the original account, and virtual credit cards are only issued to the primary card holder. These virtual cards are nearly impossible to copy, which makes them extremely secure for online transactions. On the merchant side, a virtual credit card is no different in terms of payment processing than an actual card. Charges will appear on the customer’s regular credit card bill, but the merchant won’t have their actual card number.

How can Someone Obtain a Virtual Credit Card?

A consumer can obtain a virtual credit card from the issuing bank of their original card. Not all banks will offer this service, but major credit card issuers have offered these virtual cards as a convenience for their customers. Sometimes a credit card company (such as MasterCard) will have their own virtual credit card service, but it is up to the issuer whether they offer it. If not, there are other services such as Apple Pay (available if you have an iPhone 6) that are similar to using a virtual credit card.

What are the Downsides to Using a Virtual Credit Card?

The main problem with a virtual credit card number is that it will only work for an online purchase. They aren’t usable at a physical store where you would normally have to swipe your card. A user might also find that, unbeknownst to them, the card has expired. An untrustworthy merchant can still take the payment from a virtual credit card and not ship the order. If that happens, the customer will still have to dispute the charge, but that can be done with a virtual card the same way as with the original credit card. Even with these issues, a virtual credit card adds a layer of protection for consumers making online purchases.